Publication of the Financial Reporting Lab’s report on blockchain
19 June 2018
Much has been said about the disruptive nature of blockchain, but not necessarily in relation to corporate reporting. A new report from the Financial Reporting Council’s Financial Reporting Lab (the Lab) considers how current developments and use-cases of blockchain technology might impact corporate reporting processes in the future. It concludes that, whilst cost, complexity and lack of standardisation of blockchains might be inhibiting factors, the growing use of blockchain means that those involved in corporate reporting processes need to consider its potential disruptive impact.
The report is the second in a series of technology deep-dives (following the first report on XBRL) that form part of the Lab’s wider project on Digital Future. In the report, the Lab use their digital reporting framework to explore how different technologies might impact the production, distribution and consumption of corporate reporting.
Specifically, the following potential use-cases for blockchain are considered:
In the production of corporate reporting: how transactions processed on a blockchain may help to improve accounting records.
In the distribution of corporate reporting: how a blockchain based European corporate reporting platform (European Financial Transparency Gateway) may help to open up access to corporate reporting, and
In the consumption of corporate reporting: how blockchain might help to rethink the way that reporting content is defined.
The report recommends actions for various groups who have an interest in this area including:
Actions for standard setters and professional bodies - Regulators, standard-setters and professional bodies are encouraged to monitor blockchain developments and consider how they may impact corporate reporting. The report recommends the creation of a forum where all those involved in corporate reporting can share and learn.
Actions for preparers and users of corporate reporting - Preparers and users should focus on gaining a greater level of understanding and consider experimentation and cautious innovation when costs and benefits are balanced.
Blockchain and the future of corporate reporting: How does it measure up?
Phil Fitz-Gerald, Director of the Lab, said,
“At its heart, blockchain is a technology that promises greater trust and resilience in the recording of transactions and information. These are both essential elements in the system of corporate reporting. Whilst it is not clear whether blockchain is the answer, the current rapid developments in blockchain use mean that it has the potential to have a significant disruptive impact on corporate reporting processes.
The Financial Reporting Lab brought together experts from technology, accounting and regulation to explore the potential role of blockchain in corporate reporting https://sway.com/mXeGLvcCSGV0hKfY?ref=Link